The Selective Real Estate Rebound

We all know about the U.S. real estate boom that occurred in the first half the prior decade. In the early 2000’s, real estate shot up in value in a ton of markets around the country. Existing homes increased in market value, and renovations were all the rage. New construction was popping up all over the place.

Then, as we also know, things came to a crashing halt. Home prices started to decline, and in some places they simply cratered. There have even been $1 homes for sale in Detroit! Now, I don’t live there – it’s suburban Chicago for me – and haven’t seen anything remotely like what’s happened in the motor city. Nevertheless, even vibrant suburbs here have seen big price decreases in recent years.

Not long ago, things started to change again. I observed this earlier in 2013, where I asked: is this good time to invest in real estate? It seemed at the time that prices were stabilizing, and perhaps the window of opportunity to get great deals may be closing. What I didn’t think, of course, was that the market had become strong again. Just stable.

Well, a very recent conversation I had with a couple makes it clear that the market is more than just stable in some places. In certain markets, it’s apparently a seller’s market once again. To the point where homes are selling quickly once on the market, as in within a few days!

This couple told me that they were looking for a home in a few suburbs that I would consider to be upscale. They made it seem like they were looking for something at more of an “entry level” price point in those suburbs. Now, an initial price point there might be in the half million range. Not exactly chump change, to say the least.

But this couple – really nice people – said that it was actually really hard to get a home in their target community. The homes at the high end – for the truly wealthy – sat on the market for a while. But the more reasonably priced homes were going very quickly, within a few days as I mentioned earlier.

Quite a difference from what was the case not too long ago. I’m not sure how many locales would see real estate as being red hot in the last 5 years. Even further, I think there are still many places where properties are not seeing buyers stampede to make purchases. I say this because I’ve followed prices in a few other areas, not far away and a bit lower priced, where homes still seem to be staying on the market for a while. Prices have stabilized to be sure, but no increases.

So, maybe there is a selective real estate rebound. Some areas are seeing a seller’s market, while others are still a buyers’ market. Even if the specific locales are close by each other geographically.

My Questions for You:

How is the residential real estate market near you doing?

Are you still noticing a buyer’s market where you are, or is becoming more competitive again?

Do you think we will see a full-scale housing rebound soon, or is this simply fool’s gold?

Comments

I live on Vancouver Island, so I’ll offer a bit of the perspective on real estate for our area. Here, and across Canada generally, residential real estate did not experience the crash the US market experienced since 2008. However, a vigorous debate is onging on whether real estate prices are in a bubble. They’ve certainly gone up dramatically over the past decade in particular. Since about 2010, prices have leveled in our area, and seem lately to be creeping down.

A major difference with respect to the real estate market between the US and our area is that there’s no such thing as a 30-year fixed rate mortgage here. Everyone’s mortgage resets periodically, like at most every 5 years. When interest rates generally begin rising again, that may finally pop any bubble in our real estate prices, as people have to sell because they can no longer afford their growing mortgage payment. We’ll see.

Kurt – thanks for shedding light on the different approach toward mortgages in Canada, versus what we have here in the U.S. So basically, it seems like most people take on mortgages that are essentially adjustable-rate in nature. Hopefully people are smart enough not to overextend and realize what could happen.

We live in Omaha and it definitely has rebounded and houses are selling much quicker. Truth be told, we were somewhat insulated from the downturn and did not impact us as much as it did in other areas. We have seen quite a number of houses sell in only a couple of days over the last few months so it appears things are back on the upswing in our area. In regards to if this is “real” or fool’s gold…that’s a tough one. I guess only time will tell.

Real estate is doing well in SF. A lot of places sell within just a few days here, especially with new construction. People here seem to prefer paying up for a fully remodeled place versus paying less for an older property to fix up themselves.

SF is really an international destination city now. I would imagine that the residential market there takes on a little bit different dynamic than most places in the U.S., other than Manhattan. It’s a great city with access to so much.

The market here is okay. It ebbs and flows. A lot of people think there will be a crash in the near future in a city near mine, but it’s projected that my town will benefit from it (prices are lower, etc).

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Disclaimer

We are well meaning folks that are not investment professionals or financial advisors. Please feel free to have fun here, and take this information in the spirit of entertainment, as it is not financial or legal advice, For that, seek an appropriate professional. Your actual financial decisions are your own responsibility. Thank you.